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The big challenge to Nigerian engineers as Warri refinery gushes oil
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Port Harcourt Refinery
When Abubakar Lawal Yar'Adua,group managing director, Nigerian National Petroleum Corporation (NNPC) promised in September 2007, at a meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna, Austria, that the country's refineries would resume operations by December last year, not many stakeholders took him serious.
This assurance from the NNPC helmsman was then taken with a pinch of salt, as many Nigerians had regarded it as one of the empty promises made by "another official" of government on the resuscitation of the moribund refineries.
But the NNPC boss proved cynics wrong by resuscitating the refineries within six months of his assumption of office, a feat, which the previous government, unfortunately, could not achieve in eight years.
In spite of what many have come to describe as self-glorification in fighting corruption, observance of due process, transparency and reforms, the past administration, energy experts say, apparently demonstrated that a government can not do genuine business.
This it did by privatising the refineries, especially after eight years in office.
However, since assuming office, administration of President Umaru Musa Yar'Adua has maintained that government can truly do business in public interest and this, it promptly demonstrated by reversing the organised labour and civil society coalition-resisted sale of the refineries.
Without doubt, both the Warri and Kaduna Refineries were operating below their installed capacities because of the vandalisation of the Chanomi Creek pipeline.
Attempts by the previous government to repair the pipeline failed as attacks on oil and gas installations and kidnapping of expatriate oil workers in the area had dissuaded potential contractors from going to the scene of the damage.
"I talk of Chanomi Creek today; I cannot even find a contractor that will do this job for me. We started with Wilbross. They withdrew because of the problem. We went to Saipem, but the cost has become an issue," lamented a distraught Funsho Kupolokun, former group managing director of NNPC.
It was obvious that the former NNPC boss was overwhelmed by the problems of the refineries.
But the tide appears to be fast changing since Yar'Adua and his team assumed duties at the NNPC.
The 52 million dollar contract for the repair of the Chanomi Creek Pipeline, the main feeder pipeline that supplies crude oil to Warri and Kaduna refineries was successfully executed by an indigenous firm, a contract, which Saipem, Wilbross and other foreign firms had shun for fear of militant attacks.
Interestingly, the contract was awarded to a company owned by an indigene of Niger Delta as part of strategies put in place by the government to resolve the protracted crisis in the oil-rich region.
The previous government noted for "fighting corruption" had valued the contract at about $100million, but after Lawal Yar'Adua renegotiated with the firm; the amount was reviewed downwards to $52 million.
The NNPC boss had also earlier told a bewildered nation that the Port Harcourt, Kaduna and Warri Refinies were all technically sound. Funny enough, these refineries were hitherto, earlier written off by the previous government and sold at a paltry sum of $720 million.
"All the refineries are technically sound. The refineries are technically ready and in good shape. Port Harcourt is operating. Today, it was operating at about 60 percent capacity; we are going back to 70 to 80 percent. The Kaduna refinery was operating at 85 per cent capacity. Warri was operating… until the 18th February, 2006. That was when the crude oil pipeline was vandalised. I have just got approval for the project that will repair the pipeline.
"Immediately I get back to Nigeria now, we will sign the contract. The community, Niger Delta people, has assured us of access to the place, we have evaluated the contract, we have signed agreement with the community and we expect to finish this in four months. I am putting pressure to see if we can reduce this to three months. We are looking at the possibility of bringing the refineries back on stream, maybe before the end of December, to see if we can give Nigerians a Christmas present. What I did when I took over was to give the indigenes of the community an opportunity. It is no more Wilbross or any other big firm. It is going to the indigenes of the place. That is my strategy for resolving the situation. The firm has the technical expertise. What they will do is cut the line and weld it back to standard. That is what is required. And yes, we pre-qualified them. They have been working for Shell and Mobil. We got them from the oil industry. So, it is not as if we picked a group without a pedigree. The value of the contract was over $100 million but I have successfully negotiated it down, with the use of the indigenes to around $52 million," the NNPC boss explained.
On the steps to be taken to stem pipeline vandalism, the NNPC boss noted that, "what the oil industry has tried to do is to sign a surveillance contract with the communities. But you can't be sure, you know. Even among the communities, there are factions. As I said, you just pray it will not happen again, we are trying our best to be their friends, show them that they belong and get them involved in the industry. But to say you are sure, you are guaranteed, you can't say that."
Following these laudable results achieved within the very short period of resumption, not a few Nigerians have continued to applaud the new NNPC helmsman, maintaining that Abubakar Lawal Yar'Adua "is indeed trying his best". They readily pointed at the renegotiated duration for the repair of the pipeline from four to three months and also commended the process of awarding contracts for the repair of petroleum pipelines to the host communities.
Today, the refineries are getting back on stream, even with the deployment of fewer resources.
The resumption of operations by the refineries has not only restored the confidence of Nigerians on the ability of the government to do good business for the welfare of the people, it has also demonstrated that NNPC officials are after all not corrupt as being painted in some quarters. An energy watcher insisted that, most of these officials were simply constrained by top government functionaries, "who do not follow due process when dealing with the corporation."
This cabal, he further explained, has over the years allegedly refused to give NNPC management the free hand to operate.
Experts also maintained that the resumption of operation of the refineries, has demonstrated that Nigerians and Nigerian engineers can do it right if given the opportunity.
It is envisaged that with a combined capacity of 235,000 barrels per day, the refineries will reduce the country's $4 billion (N500billion) annual fuel import bill and also cut crude oil exports by about 200,000 barrels per day.
However, there is a major challenge; the challenge of sustaining the operations of these refineries, so that Nigerians do not go back to the dark days.
It is a challenge to NNPC management; a challenge to the government and a challenge to Nigerian engineers.
The NNPC boss, concerned industry watchers have said, must brace up to this challenge by deploying resources earmarked for the maintenance of the refineries, and accounting for every kobo set aside for this purpose.
By so doing, he would have succeeded in imprinting the giant strides he has already taken in the annals of the nation's history by succeeding where others had failed.
To further consolidate on the efforts of the NNPC boss' efforts, the present government should also ensure that enough funds are available for the regular turn around maintenance of the refineries.
While looking at the local content aspect of the entire set up, Nigerian engineers, experts say, need to demonstrate high level of competence by ensuring that the refineries are always in working condition.
They decry a situation where experts are flown from abroad to fix certain technical problems at the refineries at unreasonable fees, while also condemning the practice of travelling to different parts of Europe and America in search of spare parts for the refineries.
They suggested instead, that, this can also be better done by fabricating worn-out parts in various fabricating yards in the country.
Analysts have argued though, that even if the refineries were restored to full capacity, they would still not refine enough products to meet with domestic needs. Bearing this in mind, the NNPC they advise, should re open discussions with Shell, ExxonMobil, Chevron, Total SA, and Agip for the setting up of two refineries, each with 200,000 barrels a day refining capacity at Okrika and Brass in Rivers State.
They urged NNPC to also sponsor a legislation that will mandate oil companies to refine a certain percentage of their crude oil output, as previous directives to compel them to refine 50 percent of their production locally failed due to the absence of a supporting legislation.
But the NNPC boss proved cynics wrong by resuscitating the refineries within six months of his assumption of office, a feat, which the previous government, unfortunately, could not achieve in eight years.
In spite of what many have come to describe as self-glorification in fighting corruption, observance of due process, transparency and reforms, the past administration, energy experts say, apparently demonstrated that a government can not do genuine business.
This it did by privatising the refineries, especially after eight years in office.
However, since assuming office, administration of President Umaru Musa Yar'Adua has maintained that government can truly do business in public interest and this, it promptly demonstrated by reversing the organised labour and civil society coalition-resisted sale of the refineries.
Without doubt, both the Warri and Kaduna Refineries were operating below their installed capacities because of the vandalisation of the Chanomi Creek pipeline.
Attempts by the previous government to repair the pipeline failed as attacks on oil and gas installations and kidnapping of expatriate oil workers in the area had dissuaded potential contractors from going to the scene of the damage.
"I talk of Chanomi Creek today; I cannot even find a contractor that will do this job for me. We started with Wilbross. They withdrew because of the problem. We went to Saipem, but the cost has become an issue," lamented a distraught Funsho Kupolokun, former group managing director of NNPC.
It was obvious that the former NNPC boss was overwhelmed by the problems of the refineries.
But the tide appears to be fast changing since Yar'Adua and his team assumed duties at the NNPC.
The 52 million dollar contract for the repair of the Chanomi Creek Pipeline, the main feeder pipeline that supplies crude oil to Warri and Kaduna refineries was successfully executed by an indigenous firm, a contract, which Saipem, Wilbross and other foreign firms had shun for fear of militant attacks.
Interestingly, the contract was awarded to a company owned by an indigene of Niger Delta as part of strategies put in place by the government to resolve the protracted crisis in the oil-rich region.
The previous government noted for "fighting corruption" had valued the contract at about $100million, but after Lawal Yar'Adua renegotiated with the firm; the amount was reviewed downwards to $52 million.
The NNPC boss had also earlier told a bewildered nation that the Port Harcourt, Kaduna and Warri Refinies were all technically sound. Funny enough, these refineries were hitherto, earlier written off by the previous government and sold at a paltry sum of $720 million.
"All the refineries are technically sound. The refineries are technically ready and in good shape. Port Harcourt is operating. Today, it was operating at about 60 percent capacity; we are going back to 70 to 80 percent. The Kaduna refinery was operating at 85 per cent capacity. Warri was operating… until the 18th February, 2006. That was when the crude oil pipeline was vandalised. I have just got approval for the project that will repair the pipeline.
"Immediately I get back to Nigeria now, we will sign the contract. The community, Niger Delta people, has assured us of access to the place, we have evaluated the contract, we have signed agreement with the community and we expect to finish this in four months. I am putting pressure to see if we can reduce this to three months. We are looking at the possibility of bringing the refineries back on stream, maybe before the end of December, to see if we can give Nigerians a Christmas present. What I did when I took over was to give the indigenes of the community an opportunity. It is no more Wilbross or any other big firm. It is going to the indigenes of the place. That is my strategy for resolving the situation. The firm has the technical expertise. What they will do is cut the line and weld it back to standard. That is what is required. And yes, we pre-qualified them. They have been working for Shell and Mobil. We got them from the oil industry. So, it is not as if we picked a group without a pedigree. The value of the contract was over $100 million but I have successfully negotiated it down, with the use of the indigenes to around $52 million," the NNPC boss explained.
On the steps to be taken to stem pipeline vandalism, the NNPC boss noted that, "what the oil industry has tried to do is to sign a surveillance contract with the communities. But you can't be sure, you know. Even among the communities, there are factions. As I said, you just pray it will not happen again, we are trying our best to be their friends, show them that they belong and get them involved in the industry. But to say you are sure, you are guaranteed, you can't say that."
Following these laudable results achieved within the very short period of resumption, not a few Nigerians have continued to applaud the new NNPC helmsman, maintaining that Abubakar Lawal Yar'Adua "is indeed trying his best". They readily pointed at the renegotiated duration for the repair of the pipeline from four to three months and also commended the process of awarding contracts for the repair of petroleum pipelines to the host communities.
Today, the refineries are getting back on stream, even with the deployment of fewer resources.
The resumption of operations by the refineries has not only restored the confidence of Nigerians on the ability of the government to do good business for the welfare of the people, it has also demonstrated that NNPC officials are after all not corrupt as being painted in some quarters. An energy watcher insisted that, most of these officials were simply constrained by top government functionaries, "who do not follow due process when dealing with the corporation."
This cabal, he further explained, has over the years allegedly refused to give NNPC management the free hand to operate.
Experts also maintained that the resumption of operation of the refineries, has demonstrated that Nigerians and Nigerian engineers can do it right if given the opportunity.
It is envisaged that with a combined capacity of 235,000 barrels per day, the refineries will reduce the country's $4 billion (N500billion) annual fuel import bill and also cut crude oil exports by about 200,000 barrels per day.
However, there is a major challenge; the challenge of sustaining the operations of these refineries, so that Nigerians do not go back to the dark days.
It is a challenge to NNPC management; a challenge to the government and a challenge to Nigerian engineers.
The NNPC boss, concerned industry watchers have said, must brace up to this challenge by deploying resources earmarked for the maintenance of the refineries, and accounting for every kobo set aside for this purpose.
By so doing, he would have succeeded in imprinting the giant strides he has already taken in the annals of the nation's history by succeeding where others had failed.
To further consolidate on the efforts of the NNPC boss' efforts, the present government should also ensure that enough funds are available for the regular turn around maintenance of the refineries.
While looking at the local content aspect of the entire set up, Nigerian engineers, experts say, need to demonstrate high level of competence by ensuring that the refineries are always in working condition.
They decry a situation where experts are flown from abroad to fix certain technical problems at the refineries at unreasonable fees, while also condemning the practice of travelling to different parts of Europe and America in search of spare parts for the refineries.
They suggested instead, that, this can also be better done by fabricating worn-out parts in various fabricating yards in the country.
Analysts have argued though, that even if the refineries were restored to full capacity, they would still not refine enough products to meet with domestic needs. Bearing this in mind, the NNPC they advise, should re open discussions with Shell, ExxonMobil, Chevron, Total SA, and Agip for the setting up of two refineries, each with 200,000 barrels a day refining capacity at Okrika and Brass in Rivers State.
They urged NNPC to also sponsor a legislation that will mandate oil companies to refine a certain percentage of their crude oil output, as previous directives to compel them to refine 50 percent of their production locally failed due to the absence of a supporting legislation.
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